Department of Justice Pursuing Novartis For Illegal Kickbacks To Pharmacists

After years of investigating Swiss drugmaker Novartis, the Justice Department and 11 states are demanding almost $3.4 billion in damages and fines in a False Claims Act lawsuit involving illegal kickbacks to pharmacists. The Department of Justice’s suit alleges 166,011 Medicare and Medicaid claims were associated with kickbacks, costing the government more than $500 million in prescription reimbursement payments. Prosecutors are seeking triple that amount in damages and demanding as much as $1.83 billion in fines – $5,000 to $11,000 for each of the false claims/kickbacks.

The allegations concern Novartis illegally paying pharmacists to market its products. Specifically, prosecutors allege that Novartis offered special deals to pharmacies to boost prescriptions of its transplant drug Myfortic in a head-to-head competition with Roche’s CellCept. Novartis also set up another scheme to increase refills of its iron chelation drug Exjade, according to the complaint.

One pharmacy, BioScrip, has cooperated with prosecutors, agreeing to pay $15 million and detail its financial relationship with Novartis to settle the government’s claims about Exjade kickbacks. BioScrip admitted that it pushed patients to seek Exjade refills in return for more patient referrals and higher rebates. According to the complaint, Novartis also enticed pharmacists with discounts and rebates. For example, the company offered a Los Angeles pharmacist a 5 percent “bonus” rebate on its annual Myfortic sales to switch 700 to 1,000 patients to the drug from other treatments –prompting U.S. Attorney Preet Bharara to say that Novartis “co-opted the independence of certain pharmacists and turned them into salespeople for one of its drugs.”

In addition to preparing for the Nov. 2 trial date, Novartis is defending other kickback allegations. Last October, a federal judge refused to dismiss a lawsuit claiming that Novartis lavished entertainment on certain physicians in return for increased prescriptions. That complaint alleges that Novartis salespeople spent up to $10,000 at a time on dinners for doctors, and some physicians turned up repeatedly for the same educational presentations.